By Rebecca Gardyn

Q. One of my group's donors is making a presentation about brands to an association of nonprofit professionals. He noted that for-profit companies take over brands all the time and wondered if there was anything analogous in the nonprofit world. Can you think of any examples of charities that have merged or have aggressively taken over other nonprofit groups because they thought they could do a better job?

A. Mergers in the nonprofit world are becoming increasingly common and prominent, says Kenneth Grounds, senior consultant at the McCormick Group, in Williamston, Mich., which has guided more than 150 nonprofit mergers nationwide. Competition for funding and volunteers between and among public charities has increased rapidly, particularly in the past two decades, as the number of organizations has grown substantially, notes Mr. Grounds.

"In our experience, however, we don't see charities aggressively taking over other organizations to acquire their brand or brands," he says. "Since there is no such thing as a 'hostile takeover' on the nonprofit side, it is usually the organization with the more powerful brand that dictates the terms of the merger." Instead, he says, nonprofit organizations typically merge for reasons of survivability and viability. The stronger groups seek to expand their capacity through both increasing their resources and reducing the number of competing brands, while the weaker ones seek organizations that will help sustain their mission.

Indeed, nonprofit organizations with controversial pasts sometimes merge with stronger groups in order to keep themselves afloat, says David La Piana, a management consultant in Emeryville, Calif., who has assisted with more than 100 nonprofit mergers and written several books on the topic.

"I can think of several instances in which a scandal-rocked nonprofit merged with a well-regarded one in order to survive a hail of bad press," he says.

A trend that has emerged over the past several years is the "intra-merger," says Mr. Grounds. This type of merger usually occurs with national organizations that have grown by establishing new affiliates. However, he says, because such offshoots were separately incorporated, it can be difficult to combine and brand them uniformly.

Unlike corporate mergers, nonprofit mergers lack a direct financial incentive to owners and officers, says Mr. La Piana -- there are no stock purchases or "golden parachutes" awaiting them at the end of a deal. In addition, when two charities merge, only one person can be the executive director, so one or both of the people who hold that job before the merger may lose the top position, he says. Similarly, not all trustees from the two groups will make the leap onto the merged board, which can lead to fear and distrust. As a result, he says, such mergers "are often hampered by the boards' and the executives' understandable desire to maintain their autonomy," says Mr. La Piana. "Thus, a nonprofit generally needs a very strong case to consider a merger."

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